There are a few things you need to know about rental property insurance, especially if you were living in the home and then vacated it in order to rent it out. In such a case, you want to make sure your insurance company switched you to a landlord policy instead of a homeowner policy. It covers different things and provides additional coverage. I’m no expert in insurance, so make sure you talk to your agent or your insurance company. I can, however, share a few broad things that make a difference in successfully renting out your property.
Get as much liability insurance as you can possibly buy. Generally, your insurance company will provide around $300,000 of coverage. If you can buy a million or even more – do it. You may have to dip into that money because lawsuits are very expensive, and small incidents can quickly turn into expensive lawsuits involving a lot of money.
Make sure you have rebuild cost coverage on your home, not just replacement coverage. If your home is worth $200,000, and you insure it for that amount, but it will cost you $400,000 to rebuild it the same way it is, you’re going to be out of pocket for quite a bit of money unless you have the right insurance. So, instead of buying replacement coverage, buy rebuild coverage.
Consider an Umbrella Policy
An umbrella policy will give you more coverage. You can get a million dollars of liability coverage on your landlord policy, and then your umbrella policy will kick in additional coverage.
Whatever your specific case happens to be, make sure you take insurance seriously. We have seen a lot of homeowners lose a lot of money when they’re under insured. Insurance is a valuable product, and you don’t want to be passive with your investment. Talk to your insurance company every year. Make sure it’s up to date and make changes when necessary. If you’ve done a lot of upgrades, make sure your policy reflects that. When you have a major problem at your property, that problem only gets worse when you don’t have the insurance to cover it.
If you have any questions about insurance requirements or Colorado Springs property management in general, please contact us at Muldoon Associates.